What does Jeremy Corbyn’s win mean for UK politics?

It’s hard to believe it was less than four months ago that the Conservatives won the 2015 UK General Election with a clear majority, forming the most right-wing government in many years. I argued at the time that they didn’t win it so much as Labour lost it by not presenting an alternative — an interpretation based on the fact that the people of Scotland, who were offered an alternative political philosophy, overwhelmingly voted for it. The common narrative that Labour lost by moving too far to the left makes no sense at all to me.

Cameron-Miliband-Getty-v3

Now everything has changed.

For those who have been hiding under rocks (or who are just not interested in UK politics), Jeremy Corbyn won the Labour leadership election — didn’t just win it, in fact, but won overwhelmingly, with 59.5% of first-preference votes, the next closest challenger getting only 19%. Much against the will of the Parliamentary Labour Party, they are now saddled with a leader who, for his whole 32-year tenure as an MP, has been motivated by clear principles.

At this stage, what those principles actually are seems almost a side-issue.

One of my fond hopes arising from Corbyn’s election as Labour leader is that now we have two major-party leaders who disagree about fundamentals, we just might start to see something approaching actual political journalism, about issues, in the mainstream press. For me the low-point of the last election was probably the pair of stories about how George Osborn was awful because he bought a too-expensive hamburger while Ed Miliband was awful because he ate a sandwich in the wrong way. In the absence of substantive issues to report on, one can almost forgive the press for this. But now they will have no such excuse.

So what are Corbyn’s principles? They are many, and I don’t at all agree with all of them. To pick a few areas of disagreement at random, I don’t want us to pull out of Europe*, and I support selective schools. I am not at all sure whether I agree with him on cancelling Trident. I have grave reservations about using quantitative easing to fund infrastructure (but then I had grave reservations about using QE to bail out banks, too, and that happened anyway).

But broadly, his position is one that I share: that it’s better for a country to share wealth across all of its citizens than for a small minority to hoard the great majority of it. That shouldn’t be controversial, of course — but the evidence says that it is. In thinking through the deficit earlier this year, I ended up figuring that the choices come down to this: spend less (hurting poor people) or tax more (hurting rich people). And I found myself thinking that the latter is obviously the lesser of two evils. On this, Corbyn agrees — and to me, that lies at the very foundation of a political-economic philosophy.

So at last, we find ourselves back in the classic political position, as Andrew Rilstone memorably summarised it:

The Red Party said, ‘We believe in Equality, in particular Economic Equality. We think that the Poor should be a bit Richer, and the Rich should be a bit Poorer. We are prepared to sacrifice a bit of Freedom in order to bring that about.’

The Blue Party said, ‘We believe in Freedom. We think that people should be as far as possible be left alone and allowed to do whatever they like, and we are prepared to sacrifice a great deal of Equality in order to bring that about.’

I think this is an important discussion to have, and it pains me enormously that it’s one we’ve not had in British politics since about 1997. (Not outside of Scotland, anyway.)

So I happily welcome Jeremy Corbyn as the leader of our opposition, and I look forward to seeing how the next Prime Minister’s Question Time works out.


* “I don’t want us to pull out of Europe”: to clarify, neither does Corbyn: but he doesn’t rule out switching to an Out position depending on what Cameron negotiates for the UK. For me, it would take a lot — a very, very badly bunged negotiation — to make it worth pulling out.

19 responses to “What does Jeremy Corbyn’s win mean for UK politics?

  1. “We think that the Poor should be a bit Richer, and the Rich should be a bit Poorer. We are prepared to sacrifice a bit of Freedom in order to bring that about.”

    I think this is a horribly misleading way to think. Money *is* freedom, so redistricting wealth is increasing freedom, not sacrificing it.

  2. There are many further problems with that piece of prose. “bit” versus “great deal of” is the place where my objections begin, (good evening obvious bias, take a pew) and the utter reductive simplicity is the place where they end. Is this my binary choice in the writer’s view?

    With genuine respect the axioms that you hold as irrefutable can, I hope, be challenged. You suggest “it’s better for a country to share wealth across all of its citizens than for a small minority to hoard the great majority” is something that should be non-controversial but apparently isn’t. Apparently? Where is your data? People voting against Labour – is that your data? People were polled on “wanting a small minority to hold all the wealth” and they said ‘yes!’ to that actual phrasing? A majority of British, when presented with that question said “aye, sign me up – all the wealth for just a few. Here’s a few bob to get the ball rolling!” Who conducted this survey? What was the statistical environment?

    Just because our primitive electorial system reduces a person to some trinary version of themselves (vote blue, vote red, vote null) doesn’t mean their reasons for voting for one particular party are as black-and-white as your post seems to suggest you imagine them. It’s a very interesting post you’ve written but It’s hard to enter a debate already on the wrong side of a false dichotomy.

  3. “The Red Party said,…The Blue Party said”

    That hasn’t been an active policy divide in Anglosphere politics since Clement Attlee and hasn’t even been much in rhetoric since early Thatcher.

    Today interventions against personal choice and freedom exist mostly to empower banks and other powerful insiders with political pull. It’s a drain of wealth upwards at a cost of freedom. Recent interventions aren’t sharing wealth with anyone who need it; if they really needed it, how would they get the power to extract it?

    Sure, an occasional union or guild extracts middle class power and wealth by blocking free choice among its customers and competitors but that money is mostly extracted from the middle class or poor.

    Broad based prosperity mostly requires hard work on technical issues that don’t make good political rhetoric. The cost of infrastructure like tube tunnels and high speed rail in the Anglosphere is ten times the cost in Spain or Korea; fighting incompetence in design and petty corruption in contracting is gritty detail work without visible heroes. Deregulation of closed industries for competition without losing public service and safety is complicated and makes no powerful friends. Making health care work is even harder and even less rewarded. And there’s no Red and Blue on those issues.

    Frank talk about mass immigration, refugee fraud, and the costs of adding unskilled masses to already overpopulated nations is the best working people can hope for from partisan politics. And that gets ugly fast if regular parties refuse to take it up.

  4. The problem is that it isn’t just tax more and spend more. Modern politicians if they have the option, always, Always, spend more money then is taken in in taxes.

    I’ve said this here before, that leads to too much debt, and the current mode of handling the debt is to print all the money being borrowed. Which, in essence, shrinks the value of all the money in people’s pockets. This affects the poor more than the rich. Especially when the stock market responds to the inflation ahead of almost everything else. Making the rich richer.

    The ideal state perhaps would be one that spends exactly what it takes in and has a progressive tax structure taxing the rich more. That would actually be more fair.

    BUT when the tables tip and the politicians are unwilling to raise taxes or increase tax revenue in order to increase spending (or lower spending because revenues are down), then the borrowing starts, and it doesn’t look like they’ll be able to stop it. The market freaks out whenever the FED (in the US) even hints about stopping printing money or increasing interest rates.

    Its fine to have social programs and its good to help the poor. But when you borrow to do it, in the end you are helping no one. That system will fail and fail spectacularly some day.

    Fiscally responsible political parties are what most countries really need right now. However very few honestly responsible parties exist (perhaps none).

  5. cjp39, I take your point but I think the substance of the Rilstone quote is pretty clear: in order to achieve more equality, the Red Party are prepared to take away some freedom as the Blue Party think of it — for example, the freedom to pay less than minimum wage to one’s factory workers.

    Robin Jubber, I agree that Rilstone’s use of “a bit” vs. “a great deal” is problematic: in order to get in a sideswipe, he sacrificed the clarity of his underlying point. I wish he’d written “we are prepared to sacrifice a bit of Equality in order to bring that about”, and toyed with the idea of rewriting the quote accordingly, but concluded it was more honest to quote what he actually wrote.

    Why did I say that we as a country seem to want to concentrate wealth into the hands of a few? Take for example the broad opposition to inheritance tax — a tax that cannot possibly affect most of the people who oppose it, except in that the money that it brings in would improve the schools and hospitals that they rely on. Why do people earning £30k oppose tax rises for those earning more than £100k? It’s hard to explain, but they do. I can only assume that many of the working poor are what Steinbeck (supposedly) called “temporarily embarrassed millionaires, voting against their own interests because of their aspiration to enter the class where that vote will be in their interests. While the motivation for such attitudes is open to debate, their existence hardly is.

    behiker57w, You say “The cost of infrastructure like tube tunnels and high speed rail in the Anglosphere is ten times the cost in Spain or Korea”. I didn’t know that. Can you explain why? (For that matter, can you substantiate the claim? It seems unlikely to me.)

    jwerpy, I think your comment is an argument against quantitative easing, am I correct? Much of what you say here makes sense to me; but I want to know why, if this is right, QE was the right answer for the banks.

  6. “Much of what you say here makes sense to me; but I want to know whyif this is right, QE was the right answer for the banks.”

    QE was not the right answer for the banks (policy-wise): I it was meant as a way to increase immediate liquidity, but ended up flooding the stock market and fueling a “stock bubble”. In that way, QE did not increase credit concession to productive enterprises, but simply allowed the first players to get the money (banks) to inflate the value of existing stock investments, thereby redistributing that cash to those who already owned the companies… “Right answer” for the banks, not for everybody else…

  7. “I want to know why, if this is right, QE was the right answer for the banks.”

    According to http://www.bankofengland.co.uk/monetarypolicy/Pages/qe/qe_faqs.aspx, QE involves purchasing gilts (UK government–issued bonds) from “investors such as pension funds and insurance companies”, which in turn induces them to purchase other assets like shares. This drives up the prices of everything involved, and since “wealth” is defined using spot prices, wealth grows proportionally to this demand increase, and not according to what one night naïvely expect from the size of the QE investment versus the size of the economy.

    Bank profits scale with wealth, since they are derived from trading wealth, so banks will do much better after a liquidity injection (not to mention the spot price jump directly translating to profits on existing positions!). Higher bond and share prices affect the involved companies much more slowly, as to access their good fortune, they need to issue new bonds and shares. (Again benefitting banks.)

    Given this inevitable surge of good fortune for banks, as a pension fund who’s just been given QE money, who would you invest in? Probably banks, driving up their share price, and making the bankers, who typically get their bonuses as options, a massive boost in wealth, since options are inherently leveraged. Some will retire; others will start their own investment vehicles. Either way, a fresh generation of smart mind will be lured into the economically worthless activity of trading, buoyed by the success once again of the mantra, “heads I win, tails you lose”.

    On the other hand, if QE were used to build houses, we would create new jobs, unskilled manual jobs, benefitting the poor, right? Sadly, no. Houses are expensive not because of a lack of desire to build, but because land is expensive. The money from investing QE in houses would mainly go to the wealthy land owners. (Think oligarchs and oil barons.) And again, since this wealth is driven by spot prices, its grows more than you would expect for the super rich. (Regular home owners can’t cash in, as they have to live somewhere.) Rental costs go up to match, disproportionately hurting the poor.

    I’m going to stop depressing myself now. Vive la revolution!

  8. cjp39, you paint a bleak picture indeed. What do you think the government (whether Cameron or Corbyn) should do?

  9. Damned if I know. Wealth grants power, and power begets wealth. What we want, effectively, is to permanently collapse the value of land and stock, without a knock-on effect on wages. Last time that happened was during WW2, and I’m not sure I like that option much.

  10. I can only endorse the comments here about the disequilibrium between “a bit of freedom” and “a great deal of equality” in the Rilstone piece.

    At that stage of his career, Rilstone was much concerned about the sound and cadence of writing, and it may be that he thought that repetition with slight variation was more rhythmically satisfying. (He may have thought that the aesthetically pleasing version was more likely to be true, since beauty is truth and truth is beauty.) But it does come across as biased against the Conservative Party.

    Scholars who have studied the original text have suggested that it formed part of a satirical fable directed at Tony Blair, who had recently been elected leader of the Labour party. The text begins “Once upon a time, there were three political parties; a big party, a medium party, and a little baby party,….” which makes it quite clear that Rilstone is being frivolous and does not intend this to be his final and settled picture of English politics. He seems to be consciously presenting a naive and simplified picture of the two parties, the better to present his main point — about what happens when the leader of the Red party thinks that the Blue party are right about everything while simultaneously telling people to vote Reds because Blues are equal.

    http://www.andrewrilstone.com/2015/05/one-hundred-years-ago.html

    (Compare this with his seminal 2010 essay in which Tony Blair is presented as “P.C Plod” and Saddam Hussain as “Burglar Bill”.)

    http://www.andrewrilstone.com/2010/02/on-monday-p.html

    Rilstonians tend to agree that the Freedom vs Equality dichotomy is broadly valid: the socialist does indeed say “if you give up some of you autonomy to the state, we’ll give you a more equal society” and the conservative does indeed say “the state won’t take any of your autonomy, but society will remain very unequal.” An Oxford medievalist who Rilstone is thought to have read once wrote an essay called “Willing Slaves of the Welfare State” arguing that even if the Health Service improved the lot of ordinary people, the sacrifice in liberty that Labour demanded was too high a price to pay.

    Of course, neither “Red” nor “Blue”, either in real life or in the fable, have ever believed in 100% freedom or 100% equality, but each side often accuses the other of doing precisely that. “Blue” says that “Red” wants a society where every individual has exactly the same amount of money as every other individual, and The State decide what breakfast cereal you eat. “Red” says that “Blue” want to abolish all state interference whatsoever and would be happy to see babies starving to death in the gutter to bring that about. If “Red” or “Blue” ripostes that no, this isn’t at all what they believe than “Blue” or “Red” will instantly accuse them of being liars or hypocrites.

    Note that the argument is often confused because “Red” and “Blue” are equally prone to redefine terms at a whim. So “Red” will say that no, they are not opposed to freedom, because true equality is the greatest freedom that there; and “Blue” will say that they are every bit as keen on equality as “Red” is because total freedom is the only form of equality worth having. “Red” comes up with some crazy rule about health and safety that will put half the small companies out of business and says “but of course, the freedom to go to work without cutting yourself on a sharp paper clip is the most important freedom of all”. “Blue” presides over a society where some workers doing 60 hours weeks still can’t afford to rent and heat a modest home and says “The state will interfere in neither the lives of the rich nor the lives of the poor; so the rich and the poor are treated equally in the way that really matters.”

    “In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread” as some French fella said.

    The reception of this piece, and the extent to which it was misunderstood, resulted in Rilstone largely withdrawing from the political fray and dedicated himself to his first love — waffling on endlessly about old comic books.

    http://www.andrewrilstone.com/

  11. On rail construction costs and the price everyday citizens pay for bad leadership, I find Alon Levy’s blog helpful. It’s not about theory or ideology but the details of real failure to run a city and a nation well. Nevertheless, Mr. Levy pulls back the veil a bit about what really shapes a community’s future.

    https://pedestrianobservations.wordpress.com/2011/05/16/us-rail-construction-costs/

    The various issues here illustrate my point that Red and Blue are fake categories. QE, skyrocketing land rents, and financial crises are the policies of all major parties. No one is going to nationalize the banks nor allow them to go bankrupt when they fail. Tuitions rising out of middle class reach, a militaristic approach to drugs instead of a public health approach, mass immigration to drive down wages, and turning technology to building a 1984-style surveillance state seem like ideological issues but all the major parties in the Anglosphere agree on them.

    The policies that can actually be changed — the ones where one party is permitted to differ from another — are matters of leadership and competence. Theoretical tradeoffs between equality and freedom have nothing to do with them.

  12. You are right. Quantitative Easing is horrendous fiscal policy. It hurts the poor and helps the rich while its in effect, and it’ll destroy everybody on the way out.

  13. It does seem strange … the one thing I learned about economics as a very small child is that The Government Can’t Just Print Money. Except it turns out that it can — but only when it really, really wants to.

    Perhaps what’s going on is this. You can print money, but you can’t create value. But printing money can move value around. So if we doubled the total amount of money in the UK, all the money we earned would be worth only half as much: but if the new money were given to the poorest people, then they would have more than twice as much money (and so more total value than they started with) while the richest people would suffer a loss of value. Leaving aside all the secondary effects of QE (loss of confidence in currency, etc.) does this seem basically correct?

    Only I can’t help noticing that the use of QE to bail out the banks seems to have been exactly the opposite: a way of transferring more value from the general population to the richest people (i.e. the bankers).

  14. Pingback: Where does the political centre lie? | The Reinvigorated Programmer

  15. Pingback: Tim Farron, Lib Dems and the Political Centre Ground | The Reinvigorated Programmer

  16. “It does seem strange … the one thing I learned about economics as a very small child is that The Government Can’t Just Print Money. Except it turns out that it can — but only when it really, really wants to.”

    Well lots of people learnt this but this is relic from an age gone by. That age was where currencies were tied or “convertible” to an asset such as Gold. The US famously left this system when Nixon withdrew the convertibility of the US Dollar in 1971. Since then the dollar was floated and the is no limit to the quantum that the US Treasury can spend.

    https://en.wikipedia.org/wiki/Nixon_Shock

    We in the UK were part of a system called the ERM or Exchange rate mechanism, where all the main euro currencies were pegged to eachother, i.e. the main Euro countries central banks had to control the money supply so that exchange rates did not leave predetermined bounds. The UK famously left after Black Wednesday in 1992 and our £ was floated or became a free float like the US dollar 2 decades before.

    https://en.wikipedia.org/wiki/Black_Wednesday

    After 1992 we in the UK have no resistrictions on quantum. Japan’s Yen is also a “true sovereign” that’s why Japan has debt to GDP over 200% and negative interest rates. Japans own QE of the 1990s (the first ever QE) disproved that “printing money causes inflation” that the neoliberals all claimed. This was further proved by USA/UK post 2008 when we did QE.

    So, people (Conservatives) think wrongly that we are still in the old system of convertibility, that government money is restricted, it is not. Also the term “printing money” is childish, all money is electronic, we credit accounts by changing numbers on a spreadsheet, that’s all.

    QE is the government swapping bonds for cash from big bondholders (pension funds etc) but the pension funds still see the new cash on their books as savings and don;t want to spend it. The yields on government bonds are very low so the Pension funds will use the cash to buy stock, property or real assets,so asset prices have risen, but the economy has not been helped.

    Another point to note. Sovereign currency governments do not NEED to “borrow” money, they can create it at zero cost because they have their own central banks. The concept of “deficits”, “debt” being a problem is truly absurd and has been used ruthlessly by the Tories to cut back the state.

    Thinks about this “the debt” government spending which has not been collected in taxes. Some of that dreaded debt are household savings, in the accounts of companies who do government contracts etc. It’s more accurate to say that the debt = national savings, once you can comprehend that you’ll realise how stupid all the nonsense about “debt” “deficit” truly is, it’s all politically posturing to cut the state and even the Blue Laborites have fallen for this nonsense.

    We have no reason whatsoever to want a balanced budged. Why? Because people want to SAVE more and build up their savings due to an economic shock and uncertainty, it’s perfectly normal.

  17. That is very interesting, Mark. What you say makes sense to me, but I have to concede that almost every mainstream economist disagrees on your conclusion that the country can and should either ignore the deficit entirely or just QE its way out. Do you know where in your argument the point of disagreement is? That is, if a mainstream economist read your comment, where would be the point that he would start saying “Now wait a minute …”

  18. “Japans own QE of the 1990s (the first ever QE) disproved that “printing money causes inflation” that the neoliberals all claimed. This was further proved by USA/UK post 2008 when we did QE.”

    Actually, we printed money because we wanted inflation, and we got it. See https://en.wikipedia.org/wiki/Monetary_Policy_Committee

    “We have no reason whatsoever to want a balanced budged. Why? Because people want to SAVE more and build up their savings due to an economic shock and uncertainty, it’s perfectly normal.”

    We definitely want people to save by investing in companies that will create jobs and produce things people want, getting return on their investment because of the growth in value of that company over time. It’s questionable whether we want people to save by propping up an overweight bureaucracy, getting return on their investment by taking money away from the healthcare budget of their children. Of course, the reality is that the Cons are cutting benefits, while Labour were mainly building up the bureaucracy, so it’s unclear that there’s a sane way out that a handful of politicians would have any hope of accomplishing from within the very system they hope to reform.

  19. Mike

    It’s important to understand that politicians select the economists that believe in their political ideology or those who can be justify it, it’s not like getting scientific advice for a problem because mostly economists is always used for political purposes.

    The mainstream economists are often called “Neo classical” or sometimes “Neoliberal” economists they came into power during the 1980s, with the “small state” and the ideology that the private sector can manage everything better than the government. They also believe that inflation is a monetary phenomenon, increase money supply always increases inflation.

    The economists who believed that debt and deficits for sovereign currency countries are mostly irrelevant are “post Keynesian’s” examples of other popular post Keynesian economists are Professor Bill Mitchell and Professor Steven Keen.

    As I mentioned before the Japanese actions in the 1990s and the actions of the FED and BoE in UK post 2008 have proven the the neoliberals wrong but they have still hung onto power in the UK by conflating the UK to the Eurozone where the individual Euro countries are in a currency union and cannot create as many Euro’s as they want.

    Quoting you

    “That is, if a mainstream economist read your comment, where would be the point that he would start saying “Now wait a minute …”

    Here is an interesting article here from 2012 :-

    http://news.sky.com/story/1009436/treasury-gets-35bn-windfall-from-qe-interest

    YES you read it right.

    The Bank of England gave back the Treasury £35bn for interest in buying UK Treasury bonds (guilts).

    So theoretically if the Bank of England just bought more bonds at higher interest rates it could pay off every bit of the dreaded “debt” to the Treasury by making higher interest payments. Those guilts would have been owned by pension funds and they would have received the interest payments in lieu of the Treasury if we didn’t do QE. That just illustrates what I wrote in my previous post.

    Government Debt = National Private Savings.

    The government has less debt (because HM Treasury took the interest payments instead of the Pension funds, but does it actually matter? No! We need more private savings because the commercial banks will not supply money at rates which people can afford, and people have seen real depreciation in their assets and incomes.

    Another scare story you often here is “interest rates will rise” // X, Y, Z country will “stop buying our bonds”.

    The BoE sets interest rates by buying enough guilts from the Treasury to reflect the market price it wants. We don’t need “other people” to buy our bonds, we don’t even need to issue bonds. Our government does need taxes for revenue, taxes are used to control where in the economy we want money flowing. Less low interest or free government money means we have to expand private money supply (high interest, bank money, loans) for the same GDP growth. From that last statement it’s easy to understand why banks and those with large pools of capital intrinsically dislike government spending – they want a monopoly over the money market.

    I’m not saying we should do x or y policy prescription . I’m illustrating the absurdity of it all, I’m trying to explain that it’s all just shifting numbers on spreadsheets. The idea that we can “run out of money” when we have our own central bank is something which have gripped this nation, politicians and people.

    Next time you see someone talking about how we need all these cuts show the the Sky article or this one from BBC econmoics guru Robert Peston:-

    http://www.bbc.co.uk/news/business-20270002

    and I quote:-

    “Which is not to argue that the perception of the quantum of debt is irrelevant. One of the reasons the chancellor has made this reform is that he believes it brings the UK into line with practice in Japan and the US – whose deficits, Mr Osborne would argue, have been deflated by the fact that they don’t allow their central banks to accumulate surplus cash.”

    Notice the word PERCEPTION? Even Peston is saying that’s is about “perception” (yet he also maintains it’s all really necessary!!)

    Where did this £35bn Sterling come from? Were there any horrible welfare cuts? Did we need to tear our society to bits by saying the poor are parasites? The rich are greedy? To blame foreigners? No of course not, these cuts are a deliberate political choice, “austerity” in the UK is a political tool made up by spindoctors and even embraced by Labour and from what I read yesterday even Corbyn’s team is saying this nonsense.

    Another salient point. Did this articles like this get any media attention? Did anyone ask “hmmm so why do we need all these “cuts” if we can just make more money?” This just shows you how poor the opposition to the Conservatives actually are.

    You may ask why can’t anyone see through this Austerity charade? the answer is because it kinda makes sense..Surely you can’t borrow forever and a government is just like a houseold?, surely you have to be responsible?, surely the adults (Conservatives) need to come in to sort out the mistakes the kids (Labour) have made? Surely people on benefits are costing us money, surely immigration costs money. Notice there is lots of talk about “Making Britain great” etc it’s this old post WW2 “rebuilding” narrative – it;s extremely powerful here especially amoungst over 50s who have seen what they see as the decline of Britain in their lifetime. The people who make these policies are experts at what they do.

    Today the opinions polls say the public believe in austerity so the Labour politicians follow public opinion. Well the problem is the general public are wrong; it’s that simple so it’s a case of the blind leading the blind.

    The ability to create public money public is infinite, in fact the article I linked to just proves that. We set our own interest rates. We don’t need “other people” to buy our bonds, we don’t even need to issue bonds. Less low interest or free government money means we have to expand private money supply (high interest, bank money, loans) for the same GDP growth.

    Lack of actual resources (stuff’) is what limits an economy. e.g. a lack of skills, labour, energy. When you have lots of money chasing a limited supply of labour/energy/products then yes you get inflation, when you are at high capacity and full employment. We are nowhere near that, we have millions unemployed or underemployed and idle resources.

    Capitalism can easily coexist with a strong state sector. In the East today China/Japan/Taiwan the state is used to provide employment and create infrastructure and capacity. In the UK, West the state sector is used to protect the powerful business and banking lobbies.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s